The spread in Asia between paraxylene and feedstock isomer-grade mixed xylene hit a three-year low of $160/mt Wednesday, amid an open arbitrage into Asia for PX but tight regional supplies for isomer-MX.
On Wednesday, Platts assessed the CFR Taiwan/China PX benchmark down $2/mt day on day at $1,420.50/mt, but the CFR Taiwan isomer-MX price jumped $22/mt to $1,260.50/mt -- putting the PX/isomer MX spread at $160/mt. The spread was last lower on October 11, 2010, when it stood at $148.50/mt, according to Platts data.
The Asian PX market has been under pressure since early November, on rising deepsea supplies amid an open arbitrage window from the US to Asia. According to Platts data, the FOB USG PX price was assessed at $1,305/mt Wednesday and the freight cost from the US to Asia for a 5,000-12,000 mt cargo was assessed at $89-95/mt -- putting the total cost at more than $20/mt under the CFR Taiwan/China price.
Supplies in Asia have also increased with the restart early this month of Indonesian Trans Pacific Petrochemical Indotama's long-shut 550,000 mt/year PX plant in East Java. The plant was shut in December 2011 for scheduled maintenance but has remained closed since then due to funding issues. The company has already sold two PX spot cargoes totalling 10,000 mt for loading in December via tender.
On the other hand, isomer-MX supplies are tight, with a closed arbitrage window from the US to Asia. The FOB USG MX price was assessed at 390 cents/gal, or $1,181/mt, Wednesday. Based on a $89-95/mt freight cost from the US to Asia, the CFR Taiwan isomer-MX price should be more than $1,280/mt in order for cargoes to move to Asia.
But some Asia-based market sources said Thursday that the regional PX/isomer-MX spread would likely not narrow further.
"The Asian PX market is weak but there is also a strong demand for short covering near the $1,400/mt CFR level. It seems the Asian PX market would not fall sharply," said a xylenes trader.
Early Thursday, the Asian PX and MX markets were stable, with the spread remaining unchanged from Wednesday's Asian close.
